Mango Markets shuts down following SEC settlement

Solana-based decentralized exchange Mango Markets is winding down its operations.

On January 11th, Mango Markets shared via its X account that they would be ceasing operations, advising users to wind up their active trades.

According to the approved changes in governance, which include modifications in interest rates and collateral conditions, the platform will no longer facilitate loans or borrowing as of January 13. These adjustments have been endorsed by everyone involved.

The closure comes after a settlement with the US Securities and Exchange Commission (SEC).

SEC settlement

On September 27, 2024, the Securities and Exchange Commission (SEC) brought settled accusations against Mango DAO and the Blockworks Foundation, claiming they had sold unregistered securities.

On the 27th of September, 2024, the SEC announced it was taking legal action against Mango DAO and the Blockworks Foundation, accusing them of illegally selling securities without registration.

As stated by the SEC, Mango collected more than $70 million in August 2021 through the sale of MNGO governance tokens. This act reportedly contravened the Securities Act of 1933. Furthermore, the SEC claimed that Mango Labs operated without registration as a broker, thus allegedly violating the Securities Exchange Act of 1934.

In the terms of the agreement, Mango’s Decentralized Autonomous Organization (DAO) has consented to a fine of $700,000 in civil penalties, dispose of MNGO tokens, and urge trading platforms to remove the tokens from their lists.

According to Jorge Tenreiro, head of the SEC’s Crypto Assets and Cyber Unit, since we began our crypto enforcement program, our perspective has consistently been that the name ‘DAO’ (Decentralized Autonomous Organization) does not alter the truth about who is actually involved in a project.

On August 19, 2024, the Mango DAO made a decision to resolve disputes with the SEC by paying $223,228 and annihilating MNGO tokens. Subsequently, another proposal was put forth in September 2024, aiming to settle with the CFTC for an amount of $500,000.

In August 2021, Mango Markets emerged, co-founded by Maximilian Schneider, Britt Cyr, and John Kramer. This platform was designed on the Solana blockchain, serving as a decentralized exchange and lending system. Its purpose was to offer swift, affordable trading and loaning services through its governance token, MNGO.

Currently, Mango Markets’ total value locked stands at approximately $9 million. This represents a substantial drop of around 95.7% from its peak value of $210 million reached in November 2021, as reported by DefiLlama.

A history of legal and financial troubles

The closure of Mango Markets can be linked back to a security breach that occurred in October 2022. During this incident, crypto trader Avi Eisenberg managed to siphon off more than $100 million from the platform by taking advantage of a weakness in Mango’s system. This exploitation led to substantial financial losses for the company.

During a community governance vote, he repaid $67 million but kept $40 million for himself. In December 2022, U.S. officials apprehended Eisenberg on charges of fraud and market manipulation.

Eisenberg has been in detention since his apprehension, and his sentencing hearing has been pushed back on several occasions. Originally slated for December 12, 2024, it was rescheduled to February 11, 2025, and more recently to April 10, 2025. His legal representatives attribute the delay to “the intricacy of certain sentencing matters.

Eisenberg is looking at a possible 20-year jail term and could also face regulatory sanctions from the Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC).

2025-01-12 14:34

SEC settlement

A history of legal and financial troubles

Read More